Volatile Trade As Fed Lifts Rates 50bps, GDP On Tap

NZD/USD prints at $0.6450 down ~0.2% in yesterday's trading, NZD was the weakest performer in the G10 space at the margins.

• The Federal Reserve raised rates 50 bps as expected overnight, emphasizing the need for a higher terminal rate with officials expecting the Federal Funds rate to peak at 5.1% in 2023.
• The NZD/USD fell in the immediate aftermath of the decision in a peak to trough fall of ~0.9% finding support at $0.6403, before paring its losses in volatile trade as Fed Chair Powell spoke in the post meeting press conference. Kiwi met resistance at $0.6470 before late weakness in US Equities weighed on the pair as it retraced to deal at current levels.
• Cross asset flows were mixed, US Equities fell, the S&P500 was ~0.6% lower, while the DXY fell by ~0.4%.
• Technically, bulls look to target a break of the high from 3 June at $0.6576. Bears need to breach the 20-day EMA at $0.6288 to re-establish the downtrend.
• On the wires shortly we have Q3 GDP. There is a wide range of expectations for GDP starting with 0.3% q/q at the low end up to 1.3% q/q. The vast majority of forecasters expect between 0.7% and 1%. In y/y terms growth of 5.5% y/y is expected (versus 0.4% in Q2).